Audio CD

07/24/2017

One of the fastest ways to make more money in business is to stop doing things that lose money!

Sounds like a common-sense statement. It is! But this principle is practiced in business far less than you might imagine.

Here is a quick exercise that could pay big dividends.

Take five minutes and write down, off the top of your head, whether there are any projects, customers, products, or services in your company that MIGHT be losing money. (Hint: "breaking even" is the same thing as losing money.)

Then dive a little deeper into the items on your list to find out if they are making money or losing money.

Consider killing, or radically changing, anything that is losing money.

You will be amazed how fast your profit goes up when you stop doing things that lose money.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon. Or learn more here.

07/17/2017

I talk a lot in this blog and at Financial Rhythm about money and the importance of driving profitability and cash flow higher in your business.

The reason you need to focus on financial results (money), and profit and cash flow in particular, is that if the profit ever dries up, if the cash ever runs out, then everything that you have worked so hard for will go right down the toilet.

It has nothing to do with greed.

Driving profitability and cash flow is about surviving and thriving in business.

It’s about creating a business that can live and sustain itself and take care of your customers.

It’s about creating a business that can take care of you and your family from a financial perspective, not the other way around. 😊

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon. Or learn more here.

07/10/2017

From my CFO view of the world, there is really only one reason to create and maintain a reliable financial forecast in business.

To help you create a bigger and brighter financial future for you and your business.

Of course, a forecast isn’t the only tool you need to improve your financial results. But a reliable financial forecast is a surprisingly effective tool because it helps you drive growth, profitability, and cash flow higher and higher over time.

By driving growth, I mean that growing your business even modestly is very important because oftentimes if there is no growth in a business there is decay.

And you always have to be working on improving your profitability and trying to generate above average profitability in your business. If you have ever owned or worked in a business that wasn’t profitable, or that constantly struggled with profitability, you know that it can be a painful, almost gut-wrenching experience.

Being unprofitable is no fun at all. It will suck the life out of you.

Profitability is the cure.

And improving your cash flow extends past profitability. You need to make sure that your accounts receivable are being turned into cash quickly. You need to be on top of your inventory if you stock and sell physical products.

If you have debt, you have to have a good, strong cash flow to make sure you can service that debt and drive it down over time.

A reliable financial forecast isn’t the only tool you need to drive and improve your financial results.

But a reliable financial forecast is a powerful tool because it helps you more clearly see where your business is going. It helps you:

Define where your business is going financially (and where you want it to go).

Shine a light on the dangers and opportunities that lie ahead of you on your journey.

Create a roadmap to get you there safely and on time.

Monitor your pace and progress on your journey to success.

Do you have a clear view through the financial windshield of your business?

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon. Or learn more here.

07/03/2017

You wouldn’t drive along on the freeway at 70mph without a clear view through the windshield of your car (or your truck if you live here in Texas like I do). 😊

In your car, you have the rearview mirror to see what’s going on behind you.

You have the side mirrors to see what is going on very close to you.

And you have the front windshield so you can see what’s going on in front of you.

All three views of your surroundings are important. They help you get to where you are going safely and on time.

But What About Your Business?

Too many entrepreneurs and business owners are driving their company along the freeway of business with almost zero visibility through the front windshield.

They have financial statements to show them what has already happened (the view through the rearview mirror).

They have some information about what is going on day-to-day (the side mirrors).

But they have almost no view through the financial windshield of the business.

Of course, driving a car is a little different than driving a business.

The view through the financial windshield of your business is a little less clear than it is in your car. But that doesn’t mean that you should “drive blind” on the highway of business. (Otherwise you might be arrested for driving while blind - as ZZ Top would say.) 😊

A Reliable Financial Forecast is Your Friend

A reliable financial forecast is a surprisingly effective tool in business for creating the view through the financial windshield of your business. It helps you:

Define where your business is going financially (and where you want it to go).

Shine a light on the dangers and opportunities that lie ahead of you on your journey.

Create a roadmap to get you there safely and on time.

Monitor your pace and progress on your journey to success.

A reliable financial forecast will help you make better financial decisions as you work to turn your business into a net creator of cash (which is the ultimate financial goal in business).

Financial success in business is all about the monthly process of driving growth, profitability, and cash flow higher.

A clear view through the financial windshield of your business will help you make that happen.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

06/19/2017

Do you know what kind of nasty surprises are hiding in your balance sheet?

When was the last time your balance sheet got a good scrubbing?

Here’s a little accounting secret that few entrepreneurs or CEOs truly understand. Financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) are full of estimates and assumptions.

And the balance sheet is where most of those estimates accumulate (and eventually rot and die).

Here is a quote from a public company’s audited financial statements (in this case it is Chuy’s Holdings, Inc.). You will find a similar note in every set of audited financial statements you read.

Accounting Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from estimates.

I added the yellow highlighting to make that the point that even “actual” financial results include “estimates and assumptions”.

And the sentence that says, “Actual results could differ from estimates” would be more accurately stated as, “Actual results WILL differ from estimates.”

From the timing and amount of revenues recorded, the timing and amount of expenses recorded, the collectability of receivables, the value of inventory, the value of intangible assets, and a host of other amounts on the financial statements.

It requires the time and attention of someone who understands financial statements to ensure those estimates don’t accumulate (and eventually rot and die) on your balance sheet.

The accounts on your balance sheet need to be monitored, evaluated, supported and documented every month to make sure they are as accurate as possible.

Cleanliness is Next to Godliness

Now is a great time to sit down with your CFO, Controller, or outside CPA and have them walk you through your balance sheet.

Have them show you at a summary level what makes up each of the balances. Have them show you that your balance sheet is super clean (hopefully it is) and that there are no nasty surprises or dirty diapers lying around in there.

You seldom walk into a really nice home only to find a dirty, messy, disorganized interior once you walk in.

Let’s hope your business (and your balance sheet) is at least as nice and clean as your home. 😊

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

They are doing a free webinar on Wednesday, June 14, 2017 at 1:00PM Central time to roll those principles out and provide a sneak peek into the new course.

Kahuna Accounting is a unique group of experienced entrepreneurs and financial professionals who provide accounting and financial support and guidance to 250+ businesses across the United States.

They are big believers in the entrepreneurial spirit and they pride themselves on not only providing numbers for business owners, but also providing the insight behind the numbers. They know that helping a business owner drive growth, profitability, and cash flow is what really makes their work valuable.

I will be attending the webinar on Wednesday, June 14, 2017 at 1:00PM Central time and I invite you to attend as well.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

If you have, you probably learned that it’s not much fun. Perhaps people who work at unprofitable businesses should consider putting signs in their offices that say, ‘It ain’t fun if it ain’t profitable.’

If you have worked for both profitable and unprofitable businesses, we think you would agree it’s more fun when the enterprise is actually making money.

We have never heard anybody complain about excessive frugality in successful businesses; but we sure have heard about ‘the need to tighten up’ in an unprofitable one.”

“Just remember, if you want to stay viable and make some money, you’d better be prepared to be a little bit aggressive on price. This means you really do have to raise your price on a regular basis.”

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

05/29/2017

The purpose of a reliable financial forecast is to help you make better, faster business decisions.

Most entrepreneurs and business owners, and some private company investors, wait until they see profitability or cash flow problems in their historical financial statements before they finally conclude that they need to make changes in the business to improve results.

But most of those profitability and cash flow challenges can be seen in advance… far enough in advance for you to do something about them before they even happen.

Reliable – Unbiased, reality-based expectation of financial results that is designed for decision-making (not precision). Financial Forecast - A full set of forward-looking financial statements (P&L, balance sheet, and cash flow) that includes a 2-minute summary.

Unbiased is the Secret

One of the most important words in that definition is “unbiased”.

By unbiased I mean the forecast is what you expect financial results to be without regard to the plan, targets, budgets, quotas, or what your Board or investors want to hear.

That’s why asking your sales force to provide estimates of sales so you can forecast revenues doesn’t work. A sales person’s job depends on being optimistic and positive about the future and what they hope to sell in the coming months. They are biased, not unbiased (which is not a bad thing – it just has no place in the process of creating a reliable financial forecast).

That’s one of the big reasons I teach business owners, CFOs, and advisors that a reliable financial forecast should only take one person to create and maintain.

And that one person needs full license to “drop a turd in the punchbowl” if expected results in the forecast fall short of your financial plan or targets.

Your Early Warning System

That way you have a “heads up”, an early warning system, so you can make changes in the business NOW if expected results are not in line with what you are trying to accomplish.

There is no need to wait and see poor financial results in your historical financial statements before realizing that you need to make changes in the business.

The person running your financial forecasting process must have the guts and “permission” to provide an unbiased, reality-based view of expected financial results. Which means you can’t have a shoot the messenger mentality when forecasting or you will turn the forecast into an exercise in futility (and poor decision making).

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

05/22/2017

Charlie Rose did an amazing interview with Jeff Bezos, founder of Amazon.com, at the Economic Club in New York in October 2016.

I absolutely loved every minute of it. And I have watched it more than once (and will watch it more in the future). 😊

Charlie Rose started the interview by asking this question:

What is it that Amazon wants to be?

Jeff Bezos’ answer was super enlightening. This is the kind of education and insight that makes learning more and more about business fun and exciting.

Here is a summary of his response:

“Our number one conviction and idea and philosophy and principle… is customer obsession, as opposed to competitor obsession. And so we are always focused on the customer, working backwards from the customer's needs, developing new skills internally so that we can satisfy what we perceive to be future customer needs. We have a whole working backward process that starts with the customer needs and works backwards.

Willingness to think long-term. I think that is another common thread that runs through every single thing we do. We are very happy to invest in new initiatives that are very risky, for five to seven years, which most companies won't do that. Companies will invest for very long periods of time, and they should in those cases where the outcomes are more certain. It's the combination of the risk-taking and the long-term outlook that make Amazon, not unique, but special in a smaller crowd.

And then finally, taking real pride in operational excellence, so just doing things well, finding defects, and working backwards. That is all the incremental improvement that in business, most successful companies are very good at this one. If you are not good at finding defects, finding the root cause of the defects, fixing that root cause, you don't want to ever let defects flow downstream. That is a key part of doing a good job in any business in my opinion.”

Being Obsessed with Customer Experience

About 21 minutes into the interview, Jeff Bezos made a point that is important for us to think long and hard about as business owners and investors. He said:

“You don't do things for business reasons. You need to do things for the customer experience reasons. But you need to know how you are going to pay for that customer experience. You need to close the loop on the business side too.”

This statement goes back to his first point about being obsessed with the customer experience.

We would all be well served to spend more time being obsessed about the customer and the customer experience.

Not easy… but important to our ability to survive and thrive in business.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.